There May Really be 8,000 Unlicensed Cannabis Shops in NYC Says Attorney

The hundreds of millions of uncollected tax money from illegal cannabis shops can fix our streets, hospitals and pot holes says one prominent lawyer who estimates there are as many as 8,000 unregistered cannabis shops in the city.

If the 8,000 number of illegal cannabis shops is accurate, it is more than five times the 1,500 illegal smoke, vape, or cannabis shops across the city, that most city officials take as the official estimate.

Paula Collins who represents many of the unlicensed cannabis shops–says there are actually close to 8,000, a number which she first revealed in an article in Crain’s New York Business and which she confirmed in an interview with Straus News.

In Manhattan alone she told Straus News that she estimates there are around 2,000 illegal shops.

“By my math, there are 36,207 unlicensed cannabis businesses in New York State,” Collins stated. Collins explained that because there are 2,300 city blocks in Manhattan, some of which do not have unlicensed shops, but others in fact do have more than one. This is how Collins concluded that more than a quarter of the unlicensed cannabis shops from all five boroughs are in Manhattan, a number which she confirmed to Straus News.

A small pop-up stand on the side of the street may not look like your stereotypical billion-dollar business, especially when the merchandise is confiscated and they are fined thousands of dollars by the state before they can make bank–that is if they can even go to a bank.

Because cannabis is still considered a “controlled substance” at the federal level, it means patrons can’t use bank credit cards. It is strictly debit and cash and carry for the illegal cannabis shops.

When Collins was asked if these businesses are not given necessary aid because they are not considered ‘reputable establishments,’ she said, “Then why is the government in the Cannabis industry.”

Collins proposed a solution. “You know that has been some of the push back of politicians. ‘Oh there have been shootings, there have been robbers.’ Well, allow them to bank.”

Senator Chuck Schumer introduced a new bill–the Secure and Fair Enforcement Regulation (SAFER) Banking Act–which aims to allow legal cannabis operations to use federal banks. Schumer believes this will increase safety for small cannabis businesses, at least of the licensed and legal side.

One police official said he believes the cash as much as the pot products and the late night hours contribute to making illegal cannabis shops a target for criminals. The NYS district attorney in May indicted three people for a string of robberies at cannabis shops in downtown Manhattan and there have been shootings on the west side earlier this year where no one has been apprehended. NYPD responds to crime reports but is not very active in enforcing marijuana laws, per s. The principal law enforcement arm for shutting down illegal shops is the NYC Sheriff’s Department, headed by Anthony Miranda. In hearings before the City Council earlier this year, he said his office only has enough manpower to conduct raids once a week. That means only a tiny fraction of the unlicensed shops are being shut down.

Collins thinks the aim should be to legalize the unlicensed shops so that the city and state can start collecting taxes from them. The rollout of legal shops has been agonizingly slow. Of the nine licensed pot stores in New York City, five of the are in Manhattan. The Cannabis Control Board only has jurisdiction over the legal shops. It has no enforcement rights on illegal shops.

“The government does not want this tax money and I ask why?” Collins asked. “The MTA (Metropolitan Transportation Authority) desperately needs tax money. The hospitals desperately need tax money. The schools, the highways. How many times did we walk down the street and see potholes? How many times do we hear that there is a need? The migrant problem. We could generate a whole bunch of tax money. Create housing, create temporary shelters. We are losing hundreds of millions of dollars in tax money every single day and it is because the government will not give them a portal for which they can login like a regular business and pay their taxes.”

Upper West Side City Council Member Gale Brewer does not see the benefits of these shops as easily as Collins does.

“I find it particularly challenging because school is back,” Brewer said in an interview with Straus News. “And the worst thing is to have people in the high schools using the products that A) they aren’t supposed to be [using when] under 21 and B) they [illegal cannabis shops] are right by the schools. Under the current law these shops are illegal. We really need some mechanism to shut them down or do something different at the State level. Anything in between would be counter to the law.”

In 2021, when cannabis was legalized there were a total of 230 Marijuana arrests compared to double that number the previous year when cannabis in any form was illegal to possess, according to NYPD crime reports.

The city has tried to patrol it by making it illegal for landlords to rent to the unlicensed businesses. Local Law 107 of 2023, that went into effect in July prohibits “owners of commercial spaces from knowingly leasing to unlicensed sellers of marijuana or tobacco products, imposing fines of up to $10,000 on landlords for violations.”

Despite the threat of high charges and lawsuits, the cannabis business continues to grow.

“They are everywhere and near schools and that’s a problem,” Brewer said. “These shops are located near a school which is illegal if it’s within 500 feet, but they’re doing it. The prevalence of these cannabis shops and the location near schools–they are doing it on purpose,” Brewer fells.

Thus far, there have been 236 Marijuana arrests this year according to NYPD reports. As laws are amended, police officials are working to keep up with the changes, while unlicensed cannabis and smoke shop owners deal with the repercussions. But most of the enforcement work falls to city sheriffs.

Brewer went on to say, “The sheriffs are doing what they can, the corporations council, the district attorney, the state cannabis office, they have a stronger law, but it doesn’t seem to be holding them down,” she said, referring to the growing number of illegal cannabis shops.

Representatives for New York City Sheriff Anthony Miranda did not return calls for comment.

Brewer stated, “It’s a gamble they [illegal cannabis shops] are playing. It’s like whac-a-mole. Hit them and see what happens. All of these guys seem to be doing that. One cannabis dispensary was shut down recently on First Avenue across from Stuyvesant town. Within days, it was back in business.

She also said that Collins’ plan–to try and collect taxes from illegal shops–as of now is not viable. “I don’t want to collect taxes on something that is illegal,” said Brewer.

The State of New York on September 12th announced the launch of general licensing applications through New York Business Express (NYBE) platform after seeing that $70 million dollars were made in cannabis sales through late August. If all 8,000 unlicensed cannabis shops were licensed like Collins is fighting for, there would be five times the number of sales, raising sales to $350 million dollars. According to marijuana reseach firm New Frontier Data, New York should be generating over $1 billion a year in sales by 2025. But the rollout has been slow.

Chris Alexander, Executive Director of the Office of Cannabis Management is enthusiastic that the new licensing regulations will help to put New York on par with other states. “Today marks the most significant expansion of New York’s legal cannabis market since legalization, and we’ve taken a massive step towards reaching our goal of having New Yorkers being able to access safer, regulated cannabis across the state. We are immensely proud to be building the fairest, most competitive cannabis industry in the nation--one that puts most harmed by prohibition first and offers a true opportunity for all New Yorkers--not just large corporations--to compete and thrive,”